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Health Care Reform - Handling Retaliation Claims Under the Affordable Care Act

May 20, 2013

The Affordable Care Act (ACA) added Section 18C to the Fair Labor Standards Act (FLSA) to protect employees from retaliation by employers with respect to various activities they might undertake in connection with their rights and benefits under the ACA. On February 27, 2013, the Occupational Health and Safety Administration (OSHA) of the U.S. Department of Labor (DOL) published an interim final rule (IFR) in the Federal Register explaining these whistleblower and other protections.

Basic Protections

Section 18C of the FLSA provides employees protection from retaliation in the following circumstances:

  • The employee is receiving a premium tax credit or cost sharing reduction in connection with the purchase of insurance coverage through a state or federal health insurance marketplace, thereby triggering an excise tax penalty for the employer.
  • The employee is providing, or preparing to provide, information to their employer, the Federal government or the attorney general of any State relating to any violation of, or act or omission the employee reasonably believes to be a violation of, the ACA.
  • The employee is testifying in a procedure concerning any such violation, or assisting or preparing to assist in any such procedure.
  • The employee is objecting to or refusing to participate in any activity or policy, practice or assigned task that the employee reasonably believes to be in violation of the ACA.

Beginning in 2014, this protection also extends to actions by a health insurance issuer with respect to an employee’s compensation, terms or conditions of employment, regardless of whether those issuers are the employers of the person being retaliated against. Thus, an employee covered by an employer-sponsored insured group health plan will be protected from the insurer’s improperly limiting or ending his or her coverage under that plan.

The Initial Complaint and Standards of Proof

The employee seeking redress must file a complaint with OSHA within 180 days of the alleged violation, i.e., the date on which the retaliatory decision was both made and communicated to the employee. In other words, the date on which he or she is aware, or reasonably should have been aware, of the retaliatory decision. The complaint need not be in any particular form, it can be written or oral, and it need not conform to the pleading standards required in federal district courts. The complaint serves simply to alert OSHA that there has been an alleged retaliation and that the employee wants it investigated.

The complaining party must simply make a prima facie (i.e., an initial) showing that the protected activity was a “contributing factor” in the adverse action alleged in the complaint. It need not be the sole or primary factor motivating the adverse action, but only that the “protected activity, alone, or in combination with other factors, affected in some way the outcome of the employer’s decision.” This is a fairly low threshold requirement, but if the complaint does not make this showing, it will be dismissed.

Assuming the complaint gets beyond what OSHA terms “this gatekeeping phase,” the employee must then prove by a preponderance of the evidence that the alleged protected activity was a contributing factor in the alleged adverse action. To avoid liability, the employer must prove by clear and convincing evidence that it would have taken the same action in the absence of the protected activity.

Basic Procedures

Based on information obtained in its investigation, OSHA must issue written findings within 60 days of the filing of the complaint. If there is reasonable cause to believe the complaint has merit, OSHA will issue a preliminary order that could include various forms of relief, among them, reinstatement of a terminated employee, actions required to cure the violation, back pay with interest, front pay and compensatory damages. The findings, and where appropriate a preliminary order, will also advise the parties of their right to file objections, and request a hearing. OSHA’s findings will also advise the employer that it may request an award of up to $1,000 in attorneys’ fees, if it alleges that the complaint was frivolous or brought in bad faith, even if it has no objections to the findings. If objections are timely filed, any preliminary order reinstating the employee will take immediate effect, but any other remedies will be stayed until the administrative proceedings are completed.

Objections to the initial findings must be filed in writing with the Chief Administrative Law Judge (ALJ) of the DOL within 30 days of receipt of the findings. Hearings are to be held “expeditiously,” and the Assistant Secretary of the DOL may participate as a party or as an amicus. The ALJ cannot challenge the DOL’s decision to investigate or the results of the investigation, but must adjudicate the matter based on the existing record (i.e., the investigative findings and the objections raised, including supporting documentation).

The ALJ’s decision is to be served on all the parties, who have 14 days to request a review before the Administrative Review Board (ARB). The appeal is not a matter of right; the ARB has discretion to accept or deny the request for review. Judicial enforcement of a preliminary order of reinstatement or the ARB’s final decision is available to the Secretary. A complainant may seek judicial relief in a federal district court within 90 days of receipt of OSHA’s initial findings, if he or she has raised timely objections; but if not, the findings become a final order, not subject to judicial review. In addition, a complainant may seek judicial review if there has been no final decision from the DOL within 210 days of the filing of the complaint.

OSHA’s fact sheet on filing whistleblower complaints under the ACA can be found at http://www.osha.gov/Publications/whistleblower/OSHAFS-3641.pdf.

Action Steps

The most likely circumstance where employer retaliation, and hence whistleblower complaints, might arise may well be where employers become subject to the excise tax penalties under the play-or-pay provisions of the ACA. The best way for employers to avoid such complaints, therefore, is to become familiar with what these complex rules require and take the necessary steps to ensure that the coverages provided to substantially all full-time employees and their dependents meet the affordability and minimum value standards, and that any required notices with respect to those coverages are accurate, complete and timely provided.

Nevertheless, given the complexity of the ACA, the high potential for error during what will probably be an extended implementation period, the intense hostility to the law among some parts of the population, and the increasing general trend for employees to report employer violations, ACA-related whistleblower activity could very well be on the rise in 2014. Employers could become convenient targets for employee frustration with changes in the health care landscape on account of the ACA.

Employers should, therefore, not only pay careful attention to ACA compliance, but should also avoid taking actions against a whistleblowing employee that could be construed as retaliatory. If, however, adverse actions must be taken, the employer should be sure that it has clear and convincing evidence of a legitimate, non-retaliatory basis for its decision.

If you have any questions about any aspect of ACA compliance, or any other employee benefit matter, please contact any of the Honigman attorneys listed on this Alert.